Pension deficits at the country's biggest companies have quadrupled in 12
months in the wake of the Government's quantitative easing policy.

The final-salary pensions shortfall of the FTSE 350 companies has swollen from £20bn at the end of March 2011 to £80bn at the end of last month, according to pensions firm Hymans Robertson.

The figures lay bare the extent to which repeated rounds of central bank quantitative easing (QE) has distorted the pensions blackhole. A growing number of business leaders are arguing companies should pump spare cash into business growth and job creation rather than plug "artificially depressed" deficits.

But the pensions watchdog on Friday infuriated firms by rejecting calls to make allowances for the impact of QE when calculating future scheme liabilities.

In its first funding statement, the Pensions Regulator told strong companies to plug deficits rather than invest in capital expenditure.

Adam Marshall, policy director at the British Chambers of Commerce, said: "The best way to meet future pensions liabilities is to return the economy to growth and safeguard the solvency of the employers who back the schemes. We need firms to invest in real jobs and growth rather than plugging paper pensions deficits."

Jim Bligh, head of labour policy at the CBI, warned the regulator's stance could lead to some firms going bust. "The risk of insolvencies is greater if you have to pump cash into something that is locked away unproductively," he said.

Among the employers that began re-calculating future pension liabilities in March are British Airways, Marks & Spencer and Sainsbury's. They did not comment on whether they would increase their company's pension contributions.

Clive Fortes, head of consulting at Hymans Robertson, said the pension deficit had risen dramatically, primarily due to falling gilt yields, which in turn has slowed the growth of pension pots. Gilt yields have reached historically low levels because the Government bought a third of the gilt market through QE, he said.

FTSE 350 pension liabilities rose by £100bn to £600bn in the year to March 31, offset by a £40bn rise in asset values, the Hymans analysis said. Deficits rose by £60bn as a result, Mr Fortes said.

Separately, official figures showed total liabilities of private sector workplace schemes reached £1.7 trillion at the end of 2010, with gold-plated plans accounting for the bulk of obligations.